5 Signs the American Economy May Be on Shakier Ground Than You Think

[xchrom]

http://www.alternet.org/economy/5-signs-american-economy-may-be-shakier-ground-you-think



1. The middle class is still shrinking.

It’s no secret: The American middle class is in rough shape and is no longer the world’s beacon of economic opportunity. The latest jobs report data shows not stagnant, but falling wages, the bulk of it happening with nonsupervisory workers. That is very bad news.

2. Inequality hurts economic growth.

As America’s middle class has shrunk, income inequality has steadily grown in the U.S. Steven M. Fazzari and Barry Z. Cynamon, in reports for the Institute for New Economic Thinking’s project on the Political Economy of Distribution, find that growing inequality is directly linked to America’s slow recovery in the wake of the Great Recession.

3. State of the unions.

Unions ensure that American workers have the purchasing power they need to drive the economy. Their weakening crushes consumer demand and acts as a driving force in destabilizing economic inequality. Unfortunately, federal government labor statistics show a decade of declining union membership across the country.

4. The world economy is in trouble.

Just as the U.S. seems to be improving, the global economy is not looking so good, with the possibility of a prolonged downturn in Europe most worrisome. Europe appears to be sliding into deflation on a continent-wide basis, a problem that carries with it the prospect of a much steeper fall. There are serious financial worries in the air because some banks could go down if Greece or other countries restructure debt. The bank situation could hit the U.S. through credit default swap purchased by American financial companies. Remember AIG in 2008? If you do, you will not have to guess who will be on the hook if these companies fail. You, the taxpayer, that’s who!

[raccoon]

1. K&R. Most of us on DU know the first three, but kick anyway. nt